FUTURES MARKETS

FUTURES MARKETS; Report on Crude Oil Supply Sets Off a Retreat in Prices

Published: November 8, 1994

Crude oil prices fell sharply yesterday after a report showed supply could outstrip demand in the colder months, when consumption is highest.

On other commodity markets, cotton rose while hog prices fell. The Commodity Research Bureau index of 21 commodities dropped 1.15 points, to 233.01.

The International Energy Agency said in its monthly report that global crude oil production could outpace demand by as much as 100,000 barrels a day in the fourth quarter of this year.

The Paris-based group predicted earlier this year that demand would be one million barrels a day greater than supply, which would have reduced global inventories. That outlook helped prices recover from close to a five-year low this spring.

"You had a downward revision of demand and an upward revision of supply," said Morris Greenberg, an analyst at Lehman Brothers Inc. "That suggests there will be no inventory draw."

The agency said lower consumption in China and increased production from the North Sea were responsible for the turnaround in its forecast.

Crude oil for December delivery fell 37 cents, to $18.39 a barrel, on the New York Mercantile Exchange. It was the largest one-day decline in crude since Oct. 11.

Gasoline and heating oil prices fell amid fading concern about supplies as the Colonial Pipeline resumed pumping at normal volumes. Flooding near Houston forced the network of pipelines to shut temporarily last month.

December gasoline tumbled 1.88 cents, to 56.64 cents a gallon, while December heating oil slipped 0.56 cent, to 50.44 cents a gallon.

Cotton rose to a three-month high amid anticipation that a Department of Agriculture report tomorrow will say the world's crop is smaller than expected.

On the New York Cotton Exchange, cotton for December delivery rose 1.49 cents, to $73.26 cents a pound, its highest price since July 26.

Hog prices fell to their lowest level since 1980 in the wake of estimates that last week's hog slaughter was the highest on record.

December live hogs fell 0.7 cent, to 32.7 cents a pound, on the Chicago Mercantile Exchange.